Beat the price hike and build equity now
HOME BUYERS who want to beat rising interest rates and house prices may be running out of time, says one of the Capital’s leading building companies. “Wellington house prices traditionally lag behind Auckland’s,” Anthony Morsinkhof, the business development manager of UHD Residential, the Lower North Island licence holder of Golden Homes, says. “But it’s clear Auckland’s buoyant house market is starting to have a ripple effect on other regions, including ours. “We are already seeing Auckland investors looking around Wellington to buy multiple houses before we catch up with Auckland. “They realise there’s a significant opportunity to get in on the ride early, as our houses are substantially cheaper while incomes are about the same.”
BNZ chief economist Tony Alexander recently warned home buyers not to delay their purchase if they want to beat rising house prices and interest rates. “Home buyers should already have bought the house they need given our warnings regarding the shortage of property in Auckland – the effects of which we expect to soon be felt in other parts of the country where time still exists to beat the cycle as it were.” Mr Alexander calculates that, based on Real Estate Institute of New Zealand data, prices are rising at an annualised pace of about 14 per cent led by Auckland (27 per cent), Christchurch (15 per cent) and the rest of the South Island (13 per cent); Wellington’s is four per cent and the rest of the North Island, two per cent. With the Reserve Bank tipped to raise the Official Cash Rate early next year, he believes floating mortgage rates could reach 8.5 per cent amid higher migration pushing up house prices further. Other house bank price economists growth is looking agree. likely “Double- this year digit for the first time in over five years,” HSBC says in its latest economic report. “Our modelling – which follows [Reserve Bank] internal methods – suggests house prices could rise by over 10 per cent this year and we are forecasting growth of nine per cent in 2014.” “So it could be a good time to fix a mortgage now at the low current interest rate for the longer term and profit from the buoyant market,” Mr Morsinkhof says. He points out building your own home can be easier and quicker than buying an older house. “We know many people who may have looked at 50 or more properties before they find what they want or settle for the next best thing – and in the time that it took they could have had a new home built.
“What’s more, our homes can often be built below valuation price, which means they can be a quick way to build equity. “In other words, by the time the owners move in, their home already is worth more than what it cost to build.” This weekend Golden Homes will make the build cost even more attractive by drafting house plans for free, subject to conditions, at its Emerald Hill show home, in Upper Hutt “We’ll draft anyone’s dream home plans for free, whether it’s for one of our sections or a section they already own,” Mr Morsinkhof says. “And if you have a block of land that you’re looking to subdivide, we can give you free advice and direction. “We have the knowledge and experience to help with large subdivisions, too. “One of our most successful, the latest stage of Riverstone Terraces, will be open for public viewing on Sunday afternoon.”